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Cheaper unga as a million bags of maize released

Tuesday April 4 2017

People share a meal of ugali and vegetables.

People share a meal of ugali and vegetables. The price of maize of flour is expected to come down from next week. PHOTO | FILE | NATION MEDIA GROUP 

ELVIS ONDIEKI
By ELVIS ONDIEKI
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Action was taken on Tuesday to reduce the price of maize flour by offering for sale one million bags of the grain from the Strategic Grain Reserve to millers.

This is hoped to neutralise the cost effect of traders, who have been hoarding maize in the hope of selling it at higher prices. The shortage has pushed the price of a 2kg packet of maize flour to an all-time high of Sh153, from Sh130 three weeks ago.

Each of the 90-kilogramme bags to be released from the National Cereals and Produce Board will sell at Sh3,000 — way cheaper than the current market price of Sh4,500.

The plan, according to the Cabinet secretaries for Treasury and Agriculture, will see a reduction in millers’ production costs and lead to a reduction of flour prices by up to Sh38.

Treasury CS Henry Rotich and his Agriculture counterpart Willy Bett said the intervention will reinforce the zero-rating of maize flour processing inputs, which took effect on Tuesday.

GAZETTED FINANCE BILL

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“We expect the price of a 2kg packet of unga to come down to about an average of Sh115,” said Mr Rotich. “We understand that it is in the range of Sh140 to Sh150 or thereabouts.”

He said the price will fall in “not more than a week, depending on how fast the millers will take up the maize that is going to be released by board”.

The Treasury chief said the government on Tuesday gazetted the Finance Bill stemming from budget proposals he read in Parliament last week — which meant there would be an immediate reduction in millers’ costs of inputs, packaging, energy and transport.

MAIZE IMPORTS

“After that, we are going to gazette or make a public notice for importation of maize, to take effect immediately,” said Mr Rotich when the CSs addressed the Press at The Treasury after meeting representatives of the Cereal Millers Association.

Noting that Mexico was the preferred source of maize imports, Mr Bett observed that the government had not capped the quantity of tax-free maize imports but the importation window would close in July.

MONITOR AMOUNTS

“We have not set the limit of importation, but we will monitor the amounts which are coming in to see if we’re reaching a threshold that is good for pricing in the country and which will not hurt the farmer whose crop now is in the field,” he said.

Mr Bett said the release of one million bags will leave 350,000 bags in the Strategic Grain Reserve held by the board.

“Releasing up to that (one million) and knowing that we will be importing some maize, we think the intervention is worth the release,” he said.

He added: “The kind of intervention which we’re instituting now is to release up to one million of our strategic reserves from National Cereals and Produce Board. And we’re going to release them immediately from tomorrow (Wednesday). We know the uptake might take three or four or five days from the millers to pick the commodities from our stores in the NCPB,” said Mr Bett.